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Annuities and covenants for genuine commercial reasons in connection with the payer's trade or profession. The payments are made net and a gross deduction is given with tax retained added back.
The Business Tax module will sometimes insert a bond of annuity in respect of Partnership charges when data is transferred to Personal Tax.
Tax relief is given for training towards a National Vocational Qualification (NVQ). The payment is made net. Up to 1998-99 higher rate relief is given by extending the basic rate band by the gross amount. Thereafter, relief is restricted to the basic rate so no relief is given except in exceptional cases where payments are made gross and the training provider cannot give the relief retrospectively. In these cases rate restricted relief at 22% or 23% is given. Relief was withdrawn from 1/9/2000 so 2000-01 is the last year in which any relief can be given.
From 2000-01 onwards, payments are automatically under the new rules. Relief will be available only if the payer or recipient was born before 6/4/1935 and will be limited to the basic level of married couple's allowance.
In 1999-2000 and earlier years, the amount of relief and the way it is given will depend on whether the amount falls under the old rules or the new rules. In both cases the payments are made gross.
Old rules payments cannot be increased beyond the level paid in the year ending 5/4/89. The first £2,280* of relief is given as a rate restricted relief at 10% for 2011-12 (was 15% from 1996-97 to 1998-99). The rest of the relief is given as a gross deduction in the tax computation.
Relief on new rules payments is restricted to £2,150*. If the taxpayer pays into both old and new rules payment the £2,150 limit applies once to both payments.
It may be possible to obtain relief for expense paid after a business has ceased trading provided that those expense
s are closely related to the business. The payment must be made within seven years of the cessation. The gross payment made is given as a deduction in the tax computation.
The total (gross) loss is given as a deduction in the tax computation.
A claim may be made, under certain conditions, for part of the client's trade union subscriptions or friendly society premiums that relate to superannuation, life assurance, funeral or death benefits. Relief is given as a gross deduction for half the amount paid.
This deduction is unusual because it is excluded when computing the total income for the purpose of testing for the reduction of age allowances. For example, if a 70 year old person had total income of £17,700 in 1999-2000 including a death, sickness and superannuation payment of £100, the age allowance of £5,720 would be reduced by £500 (17,800 - 16,800 / 2).
Accrued relief is netted off accrued income and the result included with UK interest. If the accrued relief exceeds the accrued income, the 'loss' is set directly against the UK interest, reducing the income shown on the return and computation. If the 'loss' exceeds the interest available the unused portion must relate to the preceding or following tax year.
Business start-up investments of up to £200,000 (£1million for EIS from 2012-13onwards, £500,000 for 2008-09 to 2011/12, £400,000 for 2006/07 to 2007/08, £200,000 for 2005/06, £150,000 for 1998-99 to 2004/05) can qualify for relief. The relief is given as a rate-restricted relief at 30% from 2011-12 onwards, previous years are calculated at 20%.
Business start-up investments of up to £100,000 for SEIS from 2012-13 onwards. The relief is given as a rate-restricted relief at 50%.